Financeupdated 1h ago2 min read
U.S. Budget Deficit Nears $2 Trillion in Fiscal 2026, Treasury Reports
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Approximately $1.99 trillion deficit in 2026, up about 12% from 2025. Debt service and tariff refunds drove the rise in the year.
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Deficit Nears $2 Trillion
The United States budget deficit stood at nearly $2 trillion for the 2026 fiscal year, with the Treasury Department reporting a $1.99 trillion figure for the year ended September 30. The Treasury Department said the deficit was $1.99 trillion, marking an increase of approximately 12% from the $1.77 trillion deficit recorded in the previous fiscal year.
The Treasury Department reported that Social Security accounted for the largest share of government spending at $1.7 trillion, followed by Medicare expenditures of $1.1 trillion. The Treasury Department also reported that net interest came in at over $1 trillion for the year, rising from $970 billion recorded last year, and that individual income taxes generated $2.88 trillion in revenue during fiscal 2026.
Tariff Refunds and Interest
The federal deficit widened over the just-finished fiscal year as tariff refunds followed a Supreme Court reversal and as interest payments on the American debt rose. Between October 2025 and September 2026, the public deficit rose by 12% to 1.992 trillion dollars, and the Treasury Department data showed the deficit would be about 6.2% of GDP in 2026 versus 5.9% in 2025.
The Treasury Department said tariff refundings added 145 billion dollars to the federal government, after the Supreme Court’s early-year reversal of a broad set of new tariffs imposed by Donald Trump. The Treasury Department reported that interest on the public debt rose by 144 billion dollars (+12%) to total 1.360 trillion, and it said the 10-year note moved from under 4% in October 2025 to more than 5.20% by the end of September 2026.
What Comes Next
The Treasury Department reported that September’s monthly deficit reached $27 billion, reversing a $198 billion surplus seen last year. The Treasury Department said the public debt surpassed the 40-trillion-dollar mark during the year, reaching 41.172 trillion dollars as of September 30, and it tied the rise in borrowing costs to higher interest rates and debt-service spending.
Treasury Secretary Scott Bessent told CNBC in August that the U.S. can "grow our way out of" its increasing debt pile, and he said, "Our message to our allies, our trading partners, is that global growth is the way to take care of this mountain of debt." Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said, "When the next crisis strikes, we will almost certainly be more indebted than ever before when entering a crisis, which will limit our capacity to respond and exacerbate the damage we face," as the deficit neared $2 trillion.